The challenger bank race is hotting up as another startup is granted a banking licence.

Germany’s Number 26 has been fully approved by authorities to operate as a bank across Europe, and plans to launch in the UK imminently.

The three-year-old fintech startup backed by billionaire Paypal founder Peter Thiel now has the stamp of approval from German regulator Bafin and the European Central Bank for its mobile app, which already has 200,000 customers across eight countries, and can now extend its products and services.

The challenger will operate under the European licence, and does not plan to apply for a UK specific licence as a result of the vote to leave the EU, unless it’s required to.

“I don’t suddenly imagine it to be not applicable. We’re a startup and used to uncertainty. If we need to then we will,” he said.

While the UK business will initially be run from its Berlin headquarters, it is likely to have "some people on the ground at some point" in the UK, he added.

The new licence will allow N26 to move into savings, loans and insurance across Europe and it will next week launch an investment product, allowing account holders to invest their cash within the banking app.

The bank said it was in a strong position entering the UK market, where challengers to the big four have been widely encouraged by regulators after the banking crisis, and will rival the established banks rather than the UK's home-grown challengers.